CONSIDERATION MUST BE SUFFICIENT

1

• CONSIDERATION MUST BE SUFFICIENT
• Consideration must constitute something that the
  law
• recognizes as having value (Thomas v.
  Thomas)
• Consideration may be nominal or trivial as the
  law makes
• no enquiry as to the adequacy of
  consideration (parties
• make their own bargains)
• The cases determining whether there is sufficient
• consideration are all trying to determine
  whether anything of legal value has been given
  for the promise
• Duty imposed by law/Public duty
• An existing contractual obligation to the
  promisor (duty owed to promisor)
• Part payment of debt
• An existing contractual duty to a third party
• Compromise/forbearance to sue

2

• Pao On v. Lui Yu
• 1980 A.C. 614
• An act done before the giving of a promise to
  make a payment or to confer some other benefit
  can sometimes be consideration for the promise
• The act of the promisee must be done at the
  pomisors request
• The parties must have understood that the act was
  to be remunerated by a payment or the conferment
  or some other benefit
• The payment, or the conferment of benefit must
  have been legally enforceable had it been made in
  advance.
• Not all threats to form / breach a contract
  amount to duress only where the pressure
  exerted amounts to a coercion of the will which
  vitiates consent
• Willinston on Contracts 3rd. ed. vol 13 (1970)
  The commercial pressure alleged to constitute
  economic duress must be such that the victim
  must
• have entered the contract against his will
• have no alternative course open to him
• have been confronted with coercive acts by the
  party exerting the pressure
• Economic duress is a factor which may render a
  contract voidable it must be shown that the
  payment made or the contract entered into was not
  a voluntary act

3

• Gilbert Steel Ltd. v. University Const. Ltd.
• (1976) 12 O.R. (2d) 19 (C.A.), 67 D.L.R. (3d) 606
• Problems of long-term arrangements (for example,
  recession and inflation) and problems of
  modification of ongoing business relations
• A verbal agreement, midway through a construction
  project, to pay more for steel than what was
  originally agreed upon, was ruled unenforceable
  for want of consideration
• The court rejected the argument that the new
  agreement on price replaced the original contract
  (which, following Morris v. Baron Co. 1918 AC
  1, could have stood as valid consideration) as
  the evidence did not support the contention that
  the parties intended to rescind the original
  contract
• Consideration for the oral agreement could not be
  found in a mutual agreement to abandon the
  earlier written contract and assume the
  obligations under the new oral one, nor could
  consideration be found in a promise by the seller
  to give the buyer a good price on future
  contracts

4

• Williams v. Roffey Bros and Nicholls Ltd.
• 1991 1 Q.B. 1, 1990 1 All E.R. 512
• Russel L.J.
• In the late twentieth century I do not believe
  that the rigid approach to the concept of
  consideration to be found in Stilk v. Myrick is
  either necessary or desirable.
• Consideration there must still be, but in my
  judgment the courts nowadays should be more ready
  to find its existence so as to reflect the
  intention of the parties to the contract where
  the bargaining powers are not unequal and where
  the finding of consideration reflects the true
  intention of the parties
• Purchas L.J.
• The modern approach to the question of
  consideration would be that where there were
  benefits derived by each party to a contract of
  variation even though one party did not suffer
  detriment this would not be fatal to the
  establishing of sufficient consideration to
  support the agreement
• If both parties benefit from an agreement it is
  not necessary that each also suffer a detriment

5

• Williams v. Roffey Bros and Nicholls Ltd.
• 1991 1 Q.B. 1, 1990 1 All E.R. 512
• Glidewell L.J.
• The present state of the law can be
  expressed in the following proposition
• if A has entered into a contract with B to do
  work for, or to supply goods or services to, B in
  return for payment by B and
• at some stage before A has completely performed
  his obligations under the contract B has reason
  to doubt whether A will, or will be able to,
  complete his side of the bargain and
• B thereupon promises A an additional payment in
  return for As promise to perform his contractual
  obligations on time and
• As a result of giving his promise B obtains in
  practice a benefit, or obviates a disbenefit, and
  
• Bs promise is not given as a result of economic
  duress or fraud on the part of A, then
• The benefit to B is capable of being
  consideration of Bs promise, so that the promise
  will be legally binding